Microsoft shares rise as Azure revenue grows 48% in fiscal first quarter

Microsoft shares rose in extended trading on Wednesday after the company reported quarterly results that exceeded analyst estimates, driven by 48% growth in its Azure cloud infrastructure business.

Financial Performance and Azure Growth

Microsoft reported revenue of $92.28 billion for the fiscal first quarter ending Sept. 30, a 19% increase year over year. This exceeded the LSEG consensus estimate of $90.69 billion. Adjusted earnings per share were $4.89, compared to the $4.73 expected by analysts.

For the first time, Microsoft disclosed Azure revenue in dollars, reporting $33.17 billion for the quarter. This represents a 48% increase from the previous quarter, where growth was 42%. Microsoft finance chief Amy Hood stated on a conference call that "We still have demand that exceeds supply."

Total Microsoft Cloud revenue reached $63.9 billion, a 30% increase. The company's commercial remaining performance obligations increased 73% to $677 billion.

Infrastructure Investment and AI Demand

To meet demand for artificial intelligence, Microsoft reported $45.2 billion in capital expenditures and finance leases during the quarter, an increase of approximately 30% from a year earlier. Approximately 75% of these capital expenditures are now tied to short-lived assets, such as Intel chips and Nvidia graphics processing units, according to the company.

Amy Hood noted that "Some third-party capacity deliveries we expected in Q1 were delayed," and stated that the company expects capital expenditure to accelerate in the second half of the fiscal year due to these delays and higher costs for CPUs, GPUs, memory, and storage. Microsoft is aiming for over $50 billion in capital expenditures and finance leases for the fiscal second quarter, and $170 billion for all of calendar 2027.

Segment Results and Workforce Changes

The company reported results under two new operating segments:

• Agents and Infra: Revenue rose almost 25% to $76.8 billion. This segment includes Azure, Microsoft 365 cloud products, and other enterprise services. CEO Satya Nadella stated the number of people using the Microsoft 365 Copilot AI assistant is up 50% from last quarter.
• Devices and Consumer: Revenue declined 3% to $15.48 billion. Sales of devices and Windows licenses fell 22%, which the company attributed to higher memory and storage costs, the end of support for Windows 10, and weak PC demand.

Regarding the workforce, Microsoft previously stated it would cut 4,800 jobs and recently announced it is offering buyouts to up to 60,000 employees as it manages the costs of its AI build-out.

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Sources

• cnbc.com: Microsoft (MSFT) Q1 earnings report 2027
• markets.com: Microsoft Stock Rises as Azure Growth Hits 48% and Revenue Beats Forecasts

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.